Sunday, December 11, 2011

Ridership, Jobs and Infrastructure: Issues for High-Speed Rail in California

I read this article, below, by Stephen Levy several days ago and passed it by.  I'm re-reading it now and find it appropriate for posting on this blog.  

Levy's perspective is the most appropriate; that is, economic.  If HSR doesn't make sense financially, all other promotional rhetoric is meaningless. He carefully points out the deficiencies in the empty claims about jobs and ridership, but his case is mostly about jobs.  As I like to say, it's a cost/benefit equation that either does or doesn't work out for all of us. In this case, it doesn't.

We could say that standing between the train on one hand, and money on the other, are jobs and the economy as legitimizing the spending of money on the train.  That's a serious confusion of means and ends. 

Is that important?  For this Democratic Administration in Washington, and the Governor and Democratic Legislature in Sacramento, the critical justification for building anything remotely related to high-speed rail, is jobs and the economy. It's the mantra of politics in this coming election season.  

Therefore, the FRA has awarded the HSR project in California around $3.3 billion, which is obligated and available if the rail authority begins construction; i.e., starts to spend the money, probably preferably before those November elections.  

These elections hinge on jobs and the economy, more jobs and a better economy.  Were I a mathematician, I would construct an equation expressing the relationship of these terms; train project, jobs, economy, money. But, there's more.

The repeated claim of train = jobs/economy/money on this blog should not be confused.  For public consumption, those federal and state bond dollars, totalling around $6 billion, are aimed at the unemployment problem and the economic picture in California, where both are in very bad shape.  That, by itself doesn't make the project a boondoggle.  

The boondoggle aspect is based on the fact that vast amounts of money are going to be processed for very little result except to benefit the handful of those directly involved in this process and their croneys. 

Not only won't these awarded funds create all the claimed jobs, and boost the economy, those funds will be wasted with useless construction and a large portion flowing both out of the state and out of the country. We also know, for example, that the per mile costs of construction are twice as high in the US as they are even in expensive Europe. 

As Levy points out, the demand/use issue is one aspect whereby the rail authority persists in gross exaggerations of ridership, in the face of the realities of business travel decline.   

What Levy doesn't mention is the super high costs of train tickets for this ride, and those will also be a highly constraining limitation on ridership as well.

The inflated jobs aspect of the project should also throw cold water on that jobs/economy focus; it's what the ARRA stimulus funds were intended for, after all. 

Those dollars were intended to be used for "shovel ready" projects, and the California HSR project is anything but that.  It will still be at least a year before construction can ramp up to optimal hiring and we have yet to see just how many people actually do get employed. You could say, predictably, far fewer than predicted.

The  truth about employment generally is that there are fewer permanent jobs of any kind in the US, ironically, in a far more productive labor market.  We have been, and continue to ship our manufacturing capacity overseas for lower labor costs and increased profitability.  And, we have aggressively deployed technologies, electronic and otherwise, to heighten our per capita productivity. 

What took thousands of workers to accomplish 30 years ago, can now be done with hundreds.  In short, grandiose visions of hundreds of thousands of laborers working on the railroad is grossly misleading.

The final point Levy makes is about infrastructure spending.  On this point I also agree with him.  I'm not opposed to government spending, even with my tax dollars.  I am opposed to wasteful spending; spending on hugely expensive but dumb ideas and projects.  

I do believe in a healthy urban and regional transit infrastructure, but it should be multi-modal (not exclusively rail which is far too expensive and inflexible), convenient, and comprehensive.  Public mass transit needs to be an integrated system, not competing transit operators with operating gaps between all their service regions.  Money, in other words, is a necessary, but not sufficient condition for the improvement of transit. Inter-city high-speed rail would contribute little to this problem and its solution.
Bad cost-benefits.

In short, I favor smart spending where the most people will benefit the most.  High-speed rail is an exclusive luxury club for a limited number of well-to-do members, not for most of us.  The government should stay out of that line of work.

The Economics of High Speed Rail
Stephen Levy's Economy Blog
posted by stephen levy, a resident of the University South neighborhood, 20 hours ago
stephen levy is a member (registered user) of Palo Alto Online

I have shared three major concerns with transportation and elected officials in California.

1. Ridership

I travel to Los Angeles for business a few tines a year. If high speed rail were available now I would choose it over air travel.

But it is not available now and the HSR trip to Los Angeles will not be available for at least 20 years. In that time I expect techology to replace much business travel.

My trips to Los Angeles usually take a day (or two) for at most 2-3 hours of meetings. I appreciate the face to face contact but it comes with a big price in terms of time and travel costs. Just like more people are talking to family members via Skype or similar technology, I expect that technology will replace travel for an increasing number of business trips well before HSR reaches across the state.

I am concerned that the HSR Authority's ridership projections do not fully account for this reduction in business travel.

2. Job Impacts

Much is made in public discussion about the job creating potential of high speed rail. But the numbers are being exaggerated and jobs that are 10 years off won't help in today's era of high unemployment.

The Authority's consultants developed this concept of job-years. One job for one year is one job-year but the same new job for five years is five job-years. In addition in the publicity the "years" got dropped and 100,000 job years over the next five years became 100,000 jobs instead of 20,000 additional jobs for five years.

While I favor more infrastructure investment including on transportation and 20,000 new jobs are helpful, two things need to be remembered. The first is that even in the recession California has more than 15,000,000 jobs so 20,000 added jobs is not much. To put this in perspective the state has added more than 250,000 jobs during the past 12 months.

Moreover, this kind of funding only adds jobs when there is high unemployment. In many future years HSR funding would only compete with or replace other funding that would also add to job levels.

3. Infrastructure Spending

Since any new infrastructure spending will add jobs, this brings me to the third concern--is HSR the best use of valuable transportation infrastrucure funding?

From my experience working with regional agencies in California HSR is not the best use of scarce funds even if everything in the business plan worked out as they believe it will.

I am in favor of spending this much or more on transportation infrastructure. But I would focus it on more immediate people and goods moving investments serving intra-regional travel where most trips are taken. Such investments would serve more people and businesses and could be completed far before the now 2030s completion anticipated for HSR.

I am sure if the Governor and President asked regional leaders for ideas about large transportation investments they could come up with a list that is more immediate and with a better payoff than HSR funding as currently planned in California--bigger, bolder and better.

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